France's pension crisis may also spell trouble for Britain

Bankers warn compromise plan by French prime minister won't solve the nation's debt problem

- James Moore

French prime ministers these days have a shelf life equivalent to a football manager in the relegation zone.

The incumbent, Sébastien Lecornu, in his second spell in the job, is hoping that suspending his debt-stricken nation's wildly unpopular pension reforms, which would see the retirement age rise from 62 to 64, will allow his beleaguered administration to limp on.

The concession, which dismantles a key reform of French president Emmanuel Macron, has been offered in an attempt to secure the support of the socialists in a crucial vote on which the future of the government may depend. But it won't come cheap. UBS, the Swiss bank, expects it to cost €400m (£350m) in 2026 alone, rising to €1.8bn in 2027. Lecornu has stated this “will need to be offset” by other savings. They will not be easy to find in the midst of a profound political crisis.

France has a debt-to-GDP ratio of around 113 per cent and an unsustainable budget deficit approaching 6 per cent. Numbers like that have led to comparisons with the likes of Greece and Italy, which were at the core of the EU’s last sovereign debt crisis. They would appear to be justified.